Stocks Surge on Europtimism, Better Earnings

By Mark Gongloff

Stocks bounced right back from a selloff yesterday, as the news flow once again brightened — but huge questions remain about Europe.

The Dow ended up 162.42 to 11869.04, recouping much of yesterday’s 200-point loss.

The S&P 500 jumped 1% to 1242, back above the closely watched technical level of 1230.

The Nasdaq, which trailed all day, rose just 0.5% to 2650.67.

The rally in the S&P 500 was led by the energy sector, up 2.3%, and financials and materials, each up nearly 2%.

The VIX dropped 7%, right back below the 30 mark that divides high market anxiety from regular market anxiety.

Earnings from Ford, Boeing and Lockheed Martin this morning topped expectations, erasing some of the memory of disappointments from 3M and Amazon.com the day before.

Durable-goods orders were roughly in line with expectations, with decent details under the hood, helping to erase some of the memory of the dismal consumer-confidence data yesterday.

Meanwhile, there were just enough positive-sounding headlines out of Europe today — but no real details — to keep the rally going. Real details are likely not forthcoming any time soon, and even if they are, they will probably be inadequate to solve the problem.

But the market for now enjoys the feeling of progress, even if there’s nothing tangible to show for it.

As Peter Tchir of TF Market Advisors put it today:

Buy the rumor, sell the news: Europe is playing havoc with this old trading strategy. By only having rumors and never having news they keep the markets in permanent buy the rumor mode.

Seems like we are long past short covering and this is people getting long on rumors and plans. Everythin[I] g read tells me they are trying but that there are no solutions that are sure to work and some will ruin the entire system if they are tried and fail.

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